TMI Blog2018 (10) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this Tribunal in Tangudu Jogisetty cited [2016 (7) TMI 379 - ITAT VISAKHAPATNAM] hence, we set aside the order of the Ld.CIT(A) and direct the AO to estimate the income @5% of the goods sold. Addition u/s 68 - revision u/s 263 - reopening of assessment - Held that:- In the instant case, the AO has examined the issue, satisfied with the correctness with regard to the identity, genuineness and credit worthiness of the capital introduction, unsecured loans and the sources of investments and accepted the same as genuine. By enhancement notice, the CIT(A) intended to redo the assessment and reexamine the issue which was already examined by the AO. It is not the case of non causing enquiries by the AO as evident from assessment order in para No.2.1. AO has called for the details and examined the issue in detail. CIT(A) is not empowered to enhance the assessment by discovering the new source of income. For escapement of income, there are remedial measures provided u/s 147 and 148 of the Act. If the order passed by the AO is erroneous and prejudicial to the interest of the revenue, the alternative remedy is provided u/s 263 of the Act. Similarly, if a mistake is committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble High Court of A.P., that there were huge violations in the liquor trade with regard to the sale prices. Therefore, the Ld.CIT(A) was of the view that the decision of the ITAT, Visakhapatnam in the case of Tangudu Jogisetty cited supra is not applicable in the assessee s case and accordingly directed the AO to recompute the income estimating the net profit @10% of the purchase price. 5. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. We have heard both the parties and perused the material placed on record. In this case, the AO rejected the books of accounts and estimated the net profit at 20% of the purchases put to sale. The Ld.CIT(A) observed that the Government of Andhra Pradesh filed affidavit before the Hon ble High Court of Andhra Pradesh stating that there were huge violations in the sale prices, thus viewed that the assessee s case is distinguishable when compared to the decision of ITAT, Visakhapatnam in the case of Tangudu Jogisetty cited supra. Though the Ld.CIT(A) has taken the support of the affidavit filed by the Govt. of Andhra Pradesh and Telangana for distinguishing the case of this Tribunal, no specific devia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined that out of ₹ 37.83 lakhs, ₹ 30 lakhs was invested by him from his own sources and ₹ 7.83 lakhs was made out of regular sales and cash flow. Later on the assessee has changed the version and explained that 16 individuals of them have formed the firm and pooled the sum of ₹ 31.5 lakhs and the said firm has invested/advanced the amount to do the business of IMFL. The assessee filed confirmation letters from all the parties confirming the investment in the firm. The Ld.CIT(A) forwarded the confirmation letters and called for the remand report from the AO. The AO submitted the remand report on 07.06.2016 stating that out of 16 persons, the sources for investment of ₹ 3 lakhs was not properly explained and accepted the sources for the remaining amount as genuine. However, the Ld.CIT(A) analysed the sources of all 16 persons individually and came to conclusion that the source of all the 16 persons were not supported by the proper evidence to establish the credit worthiness of the parties. The Ld.CIT(A) further observed that all the contributors of the capital to the firm were either small agriculturists or the persons with meager income and did not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The source of income in litigation was the estimation of income and the Ld.CIT(A) has made the enhancement on account of introduction of capital and the investment of source relating the payment of Licence fee and the initial purchases which was already examined by the AO in the original assessment proceedings and this is not permissible by the Ld.CIT(A) and out of his jurisdiction. Even otherwise also, the AO has examined the sources for the introduction of capital and the sources for investment and satisfied with regard to the genuineness of the source of investment which is evident from the assessment order. Having obtained the details of confirmations and found satisfactory explanation, reexamination of the same issue is not permissible which tantamount to difference of opinion. The Ld.CIT(A) is not permitted to take up reinvestigation of the same issue in the guise of improper verification or inadequate enquiries conducted by the AO. Since the enhancement is directed towards new source of income, the Ld.AR relied on the decision of Hon ble High court of Delhi in the case of CIT Vs. Sardarilal Co reported in (2001) 170 CTR 0431, wherein, Hon ble Delhi High Court full bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51(1) of the Act and consequently the enhance is liable to be set aside? 11. The assessee filed petition for admission of additional ground stating that the only issue contested in the appeal was estimation of profit, the other issues of investments in business and sources thereof were not contested before the Ld.CIT(A). The Ld.A.R submitted that the powers conferred u/s 251 of the Act, the Ld.CIT(A) can enhance the assessment only on those issues which are agitated in appeal but not on any other issue which was not considered by the AO. As such the enhancement made by the Ld.CIT(A) was clearly outside the scope of his powers and this legal position was enunciated in various decisions of the Hon ble Supreme Court in the case of CIT Vs. Shapoorji Pallonji Mistry 44 ITR 891 , Hon ble Delhi High Court in the case of CIT Vs. Sardari Lal Co and Hon ble High Court of Kerala in the case of CIT Vs. B.P.Sherafudin. The Ld.AR further argued that, since the issue raised by the assessee vide additional ground is a legal issue and the entire information was made available before the lower authorities the same does not amount additional evidence and accordingly requested to admit the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ready reference, we extract relevant part of section 251(1)(a) of the Act which reads as under : 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; 12.1. The Act has conferred a right and vested the power in Ld.CIT(A) to make the enhancement of assessment. Though the power of the Ld.CIT(A) is coterminous with that of the AO, the Ld.CIT(A) was given power to enhance the assessment, but the CIT(A) was not vested with the power to redo the assessment made by the AO. The Ld.CIT(A) is not given powers to reframe the assessment u/s 143(3) by completely substituting the assessment made by the AO. In the instant case, the AO has examined the issue, satisfied with the correctness with regard to the identity, genuineness and credit worthiness of the capital introduction, unsecured loans and the sources of investments and accepted the same as genuine. By enhancement notice, the Ld.CIT(A) intended to redo the assessment and reexamine the issue which was already examined by the AO. It is not the case of non causing enquiries by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer of the first appellate authority vis-a-vis, the sources considered by the AO even if the action of the first appellate authority related to a new source of income not considered by the AO, it was not impermissible. It is to be noted that in Union Tyres' case (supra), this decision was 'also considered by this Court in the background of what had been stated in Daluram's case (supra) and it was observed that there was really no difference from the view expressed earlier in Shapoorji's case (supra) and Chamaria's case (supra). 7. Learned counsel for the Revenue also submitted that this conclusion of the Division Bench needs a fresh look. We have considered this submission in the background of what had been stated by the apex Court in Jute Corporations case (supra) and Daluram's case (supra). In Jute Corporation's case (supra), the apex Court while considering the question whether AAC has jurisdiction to allow the assessee to raise an additional ground in assailing the order of assessment before it, referred to Shapoorji's case (supra), and drew a distinction between the power to enhance tax on discovery of a new source of income and granting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 ITR 182 (SC) :TC 7R.653 and held that, in an appeal flied by the assessee, the AAC has no power to enhance the assessment by discovering new sources of income not considered by the ITO in the order appealed against. It was urged on behalf of the Revenue that the words enhance the assessment occurring, In s. 31 were not confined to the assessment reached through a particular process but the amount which ought to have been computed if the true total income had been found. The court observed that there was no doubt that this view was also possible, but having regard to the provisions of ss. 34 and 33B, which made provision for assessment of escaped income from new sources, the interpretation suggested on behalf of the Revenue would be against the view which had held the field for nearly 37 years. 8. Looking from the aforesaid angles, the inevitable conclusion is that whenever the question of taxability of income from a new source of income is concerned, which had not been considered by the AO, the jurisdiction to deal with the same in appropriate cases may be dealt with under s. 147/148 of the Act and s. 263 of the Act, if requisite conditions are fulfilled. It is inconceiva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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